How Does Equity Release on Jointly Owned Property Work?

Equity release on jointly owned property works by allowing both owners to access the equity tied up in their home without needing to sell it. All parties' consent is needed, and the plan must accommodate shared property rights and responsibilities.
  • Last Updated: 20 Jun 2024
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Francis Hui
What is Shared Ownership Equity Release in the UK? Joint and Co-ownership Explained. Tenants in Common Explained. Discover Everything You Need to Know. Read On...
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Key Takeaways…

  • Jointly owned property can opt into equity release, selling a portion of it to a provider—who recoups their money when you move out or pass away—while maintaining the right to live in it.
  • The safety of this financial decision hinges on your specific situation, with factors including age, home value, and future finances, so always consider consulting a provider or advisor who can help you with equity release and navigating the application.
  • The advantages include increased cash flow and the ability to stay in your home, whilst the disadvantages may include reduced inheritance and a potential impact on benefits.

So, you’re considering releasing equity from your property, which is jointly owned

Did you know that UK homeowners aged 55 and over collectively own nearly £2.6tln in property wealth? 1

Yet, a surprising amount of this wealth remains locked up, inaccessible primarily to the very people it belongs to. 

Accordingly, jointly owned property equity release – an often misunderstood option that could potentially unlock your home’s value and give you access to tax-free cash.

Our editorial team at Every Investor has considerable knowledge in this area, and we aim to clarify common misconceptions and provide comprehensive information about equity release joint ownership.

In This Article, You Will Discover:

    This article aims to provide comprehensive information on jointly owned property equity release, but it should not replace the advice of a professional financial advisor.

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    Joint Property Equity Release Mechanics

    What Is Understood by the Term Equity Release?

    The term equity release refers to a range of financial products that allow older homeowners to access the equity tied up in their property without the need to sell it.

    This is typically achieved through a loan secured against the home, which is repaid when the property is sold, usually upon the homeowner’s death or when they move into long-term care.

    So, equity release is it worth it?

    Yes, it’s worth it and can be a vital tool for covering care costs or adapting your home for mobility needs.

    The two prevalent forms of equity release are lifetime mortgages and home reversion plans.

    A lifetime mortgage is a loan against your home, repayable from your estate.

    Home reversion, in contrast, involves selling a portion of your home in exchange for a lump sum or regular payments while maintaining residency.

    What is Shared Ownership Equity Release in the UK?

    Shared Ownership Equity Release (SOER) in the UK is a financial scheme that allows homeowners, typically over the age of 55, to free up some of the value tied up in their property.

    Essentially, it is a way of retaining your home while accessing its capital value.

    This process involves selling a portion of your property’s future worth to an equity release company, allowing you to remain in your home while providing a cash lump sum or regular income.

    The uniqueness of SOER lies in its flexibility.

    You can choose to sell between 25% and 100% of your home’s future value, depending on how much money you need.

    This scheme still allows you to benefit from any future increase in your property’s value according to the percentage you retain.

    Please note, however, that you are also responsible for a corresponding proportion of any fall in value.

    Can You Obtain Equity Release With Joint Ownership?

    You can obtain equity release with joint ownership for up to two homeowners who share a single property. 

    Both homeowners must meet the minimum age requirements stipulated by the selected plan.

    Some important information to help you determine if you qualify…

    How Does Shared Ownership Equity Release Work?

    Shared ownership equity release works by allowing co-owners of a property, typically partners or spouses, to unlock the value tied up in their home while continuing to live there. 

    Both parties must meet the minimum age requirements—typically 55 and over—specified by the equity release provider. 

    The amount that can be released depends on several factors, such as the home’s value, the age of the youngest homeowner, and the specific plan chosen. 

    When both parties have passed away or moved into permanent long-term care, the property is usually sold, and the proceeds are used to repay the equity release loan and any accumulated interest. 

    Any remaining funds after the repayment are distributed to the beneficiaries of the estate. 

    The key benefit of a joint equity release plan is that if one homeowner passes away, the surviving plan holder can stay in their home until they pass away or move into long-term care.

    It is vital to obtain professional help from an equity release advisor or broker to understand the potential impacts on estate value and entitlements to means-tested benefits.

    The Difference Between Joint Tenancy and Tenants-In-Common 

    The difference between joint tenancy and tenants-in-common lies primarily in the ownership rights and what happens to the property after an owner’s death.

    In joint tenancy, co-owners have equal shares, and the right of survivorship applies, meaning ownership automatically passes to the surviving co-owners upon the death of one co-owner.

    On the other hand, tenants-in-common may own unequal shares, and ownership does not automatically pass to the surviving owner upon passing – it is determined by the deceased’s will or intestacy laws.

    Equity release is not a universal solution and carries potential risks, so it is vital for an experienced equity release advisor or broker to assess your financial situation before proceeding.

    How Do You Know if You Own Your Property as a Joint Tenancy or Tenants-in-Common? 

    You can find out whether you own your property as joint tenants or tenants-in-common by checking your property’s title deeds or the register held by the Land Registry.2

    Can You Obtain Equity Release on Your Share of a Co-Owned Property?

    No, generally, in the UK, you cannot obtain equity release on just your share of a co-owned property, and both homeowners typically need to agree jointly. 

    This is mainly to ensure the lender can take full possession of the property to repay the loan after all owners have passed away or moved into permanent, long-term care.

    Can You Obtain Equity Release When More Than 2 People Own the Property?

    No, you cannot currently obtain equity release on a property when more than two people own it. You can only obtain a single or a joint equity release plan. 

    If there are more than two people on the title deeds, then the additional owners would need to agree to be removed from the title deeds through a buy-out or alternative arrangements.

    Can You Take Out an Equity Release Plan if You Own Property Jointly With a Business or Trust?

    Typically, you cannot take out an equity release plan if you own property jointly with a business or trust. 

    Individuals must own the property in order to be eligible for equity release.

    If you fall into this category, then a qualified equity release advisor could talk you through your options. 

    What Are the Age and Eligibility Criteria for Equity Release on a Jointly Owned Property?

    The age and eligibility criteria for equity release on a jointly owned property typically require that all homeowners be at least 55 years old, though some providers set a minimum age of 60; additionally, the property must usually meet certain standards set by the lender regarding its value and condition.

    Additional criteria includes…

    • All homeowners must agree to the equity release. 
    • The property must be your primary residence. 
    • The property must typically be of a particular value, with no (or a minor) outstanding mortgage. 
    • Some providers also have additional requirements regarding the property’s type, condition, and location.

    Do Both Homeowners Need to Be Over 55 for Equity Release?

    Yes, both homeowners need to be over 55 to qualify for equity release. 

    What Are the Options if One Shared Owner Is Under 55?

    If one shared owner is under 55, equity release may not be an option for that property under current guidelines. 

    In such cases, alternative options may include waiting until both parties reach the required age or considering other financial solutions such as remortgaging, taking out a personal loan, or downsizing.

    Can a Younger, Unqualifying Homeowner Be Excluded From an Equity Release Application?

    Yes, a younger, unqualifying homeowner can be excluded from an equity release application, but it requires transferring their share of the property into the qualifying homeowner’s name.

    In other words, the title deeds must be changed from joint to single ownership. 

    It is important to note that in such a case, the equity release loan will only be issued in the name of the qualifying homeowner. 

    A qualified equity release advisor or broker can help you run through the implications this strategy could have on the costs and occupancy of your home if the homeowner passes away or enters long-term care.

    What Are the Deed Considerations for Equity Release on a Jointly Owned Property?

    The deed considerations for equity release on a jointly owned property include whether both owners agree to the plan and whether the property ownership structure (joint tenancy or tenants-in-common) affects eligibility.

    Does Equity Release Need to Be in Joint Names?

    Yes, equity release on the jointly owned property must be taken out in the joint names of the owners.

    Can 2 People Have Equity Release if Only 1 Name Is on the Deeds?

    No, two people cannot have equity release if only one name is on the deeds.

    Only the person whose name is on the deeds can apply for and receive equity release. 

    As long as the other person fulfils the equity release requirements, they could become a joint owner, but this could come at an additional cost when changing the title deeds and may negate the benefits.

    Can 1 Person Take Out Equity Release if 2 Names are on the Deeds?

    No, one person can not take out equity release if two names are on the deeds.

    All legal owners must agree to the equity release plan.

    How Much Equity Can Joint Applicants Release?

    The amount of equity that joint applicants can release primarily depends on the age of the youngest homeowner and the property’s value. 

    The older the youngest homeowner, the higher the percentage of the property’s value that can be released.

    Common Questions

    Can Joint Owners Individually Release Different Amounts of Equity?

    Is There a Jointly Owned Property Equity Release Calculator?

    What Happens to Your Equity Release Plan When One Owner Passes Away?

    What Happens to the Equity Release Plan if the Jointly Owned Property Is Sold?

    How Does the ‘No Negative Equity’ Guarantee Work in this Context?

    What if One Owner Wants to Release Equity but the Other Does Not?

    What Happens to the Equity Release Plan if the Owners Decide to Dissolve Their Partnership?

    How Do You Obtain Equity Release if One Owner Has Already Passed Away?

    Can My Husband Release Equity Without My Consent?

    What Is The Maximum Equity Release LTV (Loan To Value)?

    What Is Shared Ownership Equity Release?

    How Does Shared Ownership Equity Release Work in the UK?

    Is Shared Ownership Equity Release a Safe Option for Me?

    What Are the Pros and Cons of Shared Ownership Equity Release?

    How Can I Apply for Shared Ownership Equity Release?

    In Conclusion

    Jointly owned property equity release can be an effective way for co-owners to unlock wealth from their property. 

    It requires careful consideration and agreement from all parties involved, along with professional advice, to navigate the complexities and ensure the plan suits everyone’s needs. 

    This is specifically important when you are considering jointly owned property equity release. 

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